Barclays and HBOS slash contractor rates

Summer in the city, pay down, isn't it a pity

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Exclusive: Barclays is cutting IT contractor rates by ten per cent across the group, less than a month after cutting 1,800 IT jobs.

Back in May Barclays Capital forced contractors to take a ten per cent pay cut, and now the policy is being extended to the bank's global retail and commercial banking business.

From 31 August, anyone who refuses to take the cut will leave the company.

A spokeswoman for Barclays told the Reg: "We found we were paying over the market rate. This ten per cent cut will bring us more in line with the rest of the industry. There are no implications for permanent staff."

We are also hearing that Halifax Bank of Scotland (HBOS) is running a similar cost-cutting scheme. Staff there have until 10 August to take the cut or work out their notice and leave.

Contractors working for HBOS via agency Hayes received an email last week warning them: "Effective from midnight on Sunday, 10 August, all IT contractor pay rates are reduced by 10 per cent."

Cutting contractor rates is often seen as more palatable than reducing headcount amongst contractors or permanent staff. But the danger is that you lose better staff and keep those prepared to do ten per cent less work.

Barclays Capital cut contractor rates from 2 July. It is also offshoring 1,800 jobs to Hungary, India and Singapore. ®